TAB1 [TAK1 (transforming growth factor-β-activated kinase 1)-binding protein 1] is one of the regulatory subunits of TAK1, a protein kinase that lies at the head of three pro-inflammatory kinase cascades. In the current study we report the crystal structure of the N-terminal domain of TAB1. Surprisingly, TAB1 possesses a fold closely related to that of the PPM (Mg2+- or Mn2+-dependent protein phosphatase) family as demonstrated by the close structural similarity with protein phosphatase 2Cα. However, we were unable to detect any phosphatase activity for TAB1 using a phosphopeptide or p-nitrophenyl phosphate as substrate. Although the overall protein phosphatase 2Cα fold is conserved in TAB1, detailed structural analyses and mutagenesis studies show that several key residues required for dual metal-binding and catalysis are not present in TAB1, although binding of a single metal is supported by soaking experiments with manganese and isothermal titration calorimetry. Thus, it appears that TAB1 is a ‘pseudophosphatase’, possibly binding to and regulating accessibility of phosphorylated residues on substrates downstream of TAK1 or on the TAK1 complex itself.